Reid 'Depression' Remark Ignored by AP Until GOP Responds; TARP 2008 Deception Still Unexplored

October 23rd, 2010 10:23 AM

When a Democrat or leftist makes an ill-advised remark, it seems that there's a three-stage process at the Associated Press, and perhaps in most other establishment press outlets, for handling it. It goes roughly like this:

  • Stage 1 - Ignore it as long as you can. If there isn't much outcry, keep ignoring it.
  • Stage 2 - If there ends up being enough of an outcry from conservatives or Republicans to warrant coverage, make sure that the story is about the criticism at least as much as the remark.
  • Stage 3 - In the ensuing coverage, leave out what was originally said.

The Associated Press is currently and grudgingly at Stage 2 with Harry Reid's remark that "but for me, we'd be in a worldwide depression," as seen below (reproduced in full for fair use and discussion purposes):


It's worth going back two years to when the Troubled Asset Relief Program (TARP) legislation was passed to demonstrate that even if it helped avoid a depression (a dubious assertion in the first place), Harry Reid's support of and vote for TARP had nothing to do with it -- unless he had advance knowledge about how TARP would really be carried out.

You see, the TARP Congress voted for was not the TARP that was carried out by Hank Paulson with the cooperation of (and some say the urging of) then New York Federal Reserve President Tim Geithner.

Reid, the Senate, Nancy Pelosi, and the House voted for a TARP whose clear intent was to buy up bad mortgages, as indicated in the following articles from the relevant September-October 2008 time period:

At NPR; October 1, 2008 ("Senate OKs Bailout Package, House To Vote Friday") --


... Lawmakers in the House added provisions that would dole out the $700 billion the government wants to buy bad loans in three tranches.


... The bill also includes beefed-up oversight of the program and a cap on compensation for executives who have the Treasury buy up their bad mortgages.


At Fox News ("Reid Pushes to Reach Bailout Deal Before Markets Open"); September 28, 2008 --


... The legislation the White House is promoting would allow the government to buy bad mortgages and other sour assets held by investors, most of them financial companies.


At USA Today; September 29, 2008 ("Leaders back historic bailout; 'Now we have to get the votes'")


(in the sidebar) The Treasury Department will buy up to $700 billion of distressed mortgage-backed securities and other bad debt held by financial institutions; it will get $350 billion to start.


(in the article text) "Now we have to get the votes," said Senate Majority Leader Harry Reid, D-Nev.

Harry Reid apparently believes that because he was able "to get the votes," he should get full credit for depression avoidance. What else has he done?

But "buying up bad mortgages" is not what happened with TARP. Instead, in mid-October 2008 (covered at the time at NewsBusters; at BizzyBlog), Hank Paulson figuratively "pointed a gun to the heads" of big bank CEOs and forced them to "accept" direct government equity investments. Neil Barofsky, the special inspector general for TARP, revealed in October 2009 that Tim Geithner viewed Paulson's move as, in a CNS News paraphrase, "an offer the banks could not refuse."

I daresay that nobody who voted for the legislation, and for that matter no one else in America -- except perhaps for a number of insiders -- knew that TARP would be used to purchase ownership stakes in banks, other financial entities, and eventually car companies. I also daresay that TARP never would have gotten through Congress if those outcomes had been known.

For Harry Reid to be able to say "but for me, we'd be in a worldwide depression," he would have to also claim that he knew that TARP would not be employed as Congress clearly intended, and that he was perfectly okay with deceiving his fellow legislators and the rest of the country despite having that advance knowledge. It that really the case, Harry? Are you one of the insiders who knew what would really be done?

The establishment press, as usual, has missed an opportunity to shine a light on what really happened after TARP was passed. I suspect that this oversight has a lot to do with many of them supporting what Hank Paulson did, and what his successor has done.

Cross-posted at